Administrative reform in the Performance and Programme Budgeting System (PPBS) process

Finally, we turn to the scant amount of literature on public management reform in Bahrain. The accelerated tempo of development which followed Bahrain's Independence and which continues apace today reveals the shortcomings of the traditional budgeting system or line-item budgeting system in use now to meet the needs of the stakeholders and clients in government. The demand for transparency, efficiency, effectiveness, appropriateness and economy of government programmes and activities cannot be met by the existing budgetary systems, which are focused purely on expenditure. Added to constraints on resources, this has contributed to what is currently being practised in budget allocation as cutback management.

The NPM reforms concentrate on restructuring the traditional systems and methods of government budgeting and financial management where line-item budgeting was a problem in the traditional budgetary system challenging Bahrain. NPM management ascribed features include being linked to performance rather than inputs and attrition directed to outputs; “organisations being viewed as chains of low-trust relationships, linked by contracts or contractual type processes; the separation of purchaser and provider or client and contractors’ roles within formal integrated processes or organisations; the breaking down of large scale organisations and using competition to enable exit or choice by service users; and finally the decentralisation of budgetary and personal authority to line manager level” (Clarke, 2004: 22; Dunleavy and Hood, 1994). The Performance and Programme Budgeting System (PPBS) is an advanced system of budgeting which focuses on outputs and outcomes, namely “results”, instead of concentrating on controls, namely “inputs” or “resources”. Basically, PPBS involves extensive planning and the setting of goals and objectives as part of the budget

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formulation process, with appropriate priority setting and evaluation mechanisms in position. The basic principle of PPBS is Management by Objectives, which aims at improved accountability of programme managers for results by providing them with the necessary tools and greater flexibility to manage their programmes (MOF, 2005). Moreover, the PPBS would be designed to provide effective tools to monitor and analyse the performance of the programmes of the government.

For Weathersby and Balderston (2004: 192), “PPBS is a tool or an approach significantly shaped by the internal and external political realities” of governmental performance, specifically in service delivery. By its very nature, PPBS is a managerial and political instrument, and the institutional and political environment should always be borne in mind in the following discussion of the context and impact of PPBS. While in some practices the adapted PPBS looks as basic administrative budgeting procedure, measurable units of effort, services, and accomplishments are the PPBS focus. This approach was formulated so that expenditures would be associated explicitly with the units involved, with resources and results being identified with particular programmes rather than with traditional organisations. In addition, expenditures are currently categorised according to activity rather than by object or line-item (Ramadhan, 2009). In his comparisons between the line-item and the PPBS budgeting he illustrates:

“Line-item budgets present little useful information to decision makers on the activities and programs of the governmental unit…A Line-item budget focuses on type of expenditure and does not provide information useful to select programmes and evaluate performance. It achieves financial control rather than control on the achievement of goals. In other words, it does not relate expenditure to objectives” (ibid, p. 180).

“Since this budget presents proposed expenditure amount only by category, the justifications for such expenditures are not explicit; it does not provide information about the purpose of the expenditures or about the programmes for which they are allocated, nor about the efficiency and effectiveness of the programmes” (ibid, p. 170).

The recommendations of international aid agencies such as the World Bank and IMF that Bahrain (UNDP Reports, 1999) adopts international practices and standards in the public sector and the potential of continued financial deficits and “ad-hocracy” in budgeting have created a demand that an efficient and effective budgetary system be developed that would be able to address these issues. The orderly pursuit of government objectives requires a budgetary and management tool which would enable Parliament,

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the executives and management at all levels of the central agencies and the line ministries, departments and agencies to exercise their management roles and functions (such as planning, organising, selecting, directing, motivating, empowering, coordinating and controlling) over all government programmes and activities. PPBS is a management tool which offers the potential for bringing together all of these functions. In June 2002 the Cabinet announced its decision to adopt this system and directed that it be implemented in all government agencies and departments in the KOB.

The literature shows that since 1965, PPBS has been adopted by a vast number of countries on the recommendation of the United Nations. Developed countries such as the UK, the USA, France, Belgium, Japan, Canada, New Zealand and Australia have introduced a similar model. Programme budgeting was also taken up by other developing countries, such as India, Sri Lanka, Nepal, Malaysia, Thailand, Singapore, Philippines, Indonesia and quite recently Vietnam, Egypt, Kuwait and the UAE (partially).

In 1965 the USA introduced the PPBS, from where it was taken and disseminated around the world. Many developed countries such as the UK, Belgium, Japan, France, Canada and Australia introduced a similar model (MOP, 2004). This was followed by many of the developing countries such as India, Malaysia, Sri Lanka and Nepal. Today, most of the countries in the world implement PPBS in one form or another. It comes with different labels, which include results-based budgeting (the USA and Canada), portfolio budgeting (Australia), a modified budgeting system (Malaysia), output budgeting (New Zealand), and performance-based budgeting (Singapore and Thailand). In addition, in the USA it takes various different names, such as entrepreneurial budgeting, mission-based budgeting, and budgeting for accountability. These systems and forms have a common theme that is interested in knowing what is to be produced (in terms of goods and services and the achievement of objectives) for the budget. These budget tools seek to forge a better match between the resources allocated and the planned results, where programme managers are made accountable for the results (outcomes) (Ramadhan, 2009; MOF, 2005).

Moreover, in other countries it has been labelled as outcome budgeting, which is defined as:

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“a budget process that makes resource allocation and control decisions based on the results of the expenditure. It is distinct from budgeting based on inputs (staff, buildings, materials, etc.) and budgeting based on outputs (numbers of people educated, operations carried out, prisoners held in custody, etc.) and can be implemented in addition to the other two methods” (Flynn, 2001:1).

While all the definitions are valid in themselves, to managers, at whatever organisation they may be, PPBS is a tool that is composed of many parts which must be learned, appreciated, and applied if it is to be used effectively.

In 2005, after some 40 years, more countries were continuing to implement the PPBS in one form or another, although retaining the fundamental elements of the system, with PPBS as a performance and outcome-oriented system (MOF, 2002 and 2002a). However, since the term “PPBS” is now universally known, the term is used for the purposes of continuity, coordination and future international collaborations (MOF, 2005).